11.25.2022

Fidelity to Convert Six Thematic Mutual Funds to ETFs

11.25.2022
Fidelity to Convert Six Thematic Mutual Funds to ETFs

Fidelity Investments announced plans to convert six actively managed thematic mutual funds listed below into active equity exchange traded funds (ETFs):

  • Fidelity® Disruptive Automation Fund (FBOTX)
  • Fidelity® Disruptive Communications Fund (FNETX)
  • Fidelity® Disruptive Finance Fund (FNTEX)
  • Fidelity® Disruptive Medicine Fund (FMEDX)
  • Fidelity® Disruptive Technology Fund (FTEKX)
  • Fidelity® Disruptors Fund (FGDFX)

With this change, Fidelity adds six transparent disruptive ETFs to its current active equity ETF lineup of nine funds, which as of October 31, 2022, had roughly $720 million in assets under management. The conversions are expected to be completed in June 2023 and will be among the most competitively priced ETFs in the disruptive category.

“At Fidelity, we have a heritage of active management as well as deep fundamental research, and we are committed to delivering those proven capabilities to our customers through a range of investment vehicles including mutual funds and ETFs,” said Tim Cohen, co-head of the Equity division within Fidelity’s Asset Management business. “As investors’ preferences continue to evolve, Fidelity remains focused on ensuring that our customers have access to the products and services they want to help them meet their distinct financial goals, from ETFs and mutual funds to CITs and custom SMAs.”

While Fidelity currently manages 51 ETFs with $28 billion in assets, the firm maintains its leadership position in traditional mutual funds, with a diverse lineup of more than 450 funds, all offered commission-free and with no investment minimums.

Launched in April 2020, Fidelity’s disruptive mutual funds were designed to invest in innovative business models, emerging industries, and technologies that are changing the status quo. The new ETFs will maintain the same investment objectives as the previous mutual funds. The new ETF vehicles will provide shareholders access to the lowest pricing tier available in the disruptive funds’ time-based pricing program with a total expense ratio of 0.50%. In advance of the conversion, the mutual funds’ expense ratio will be reduced to 0.50% for all shareholders, on or about April 1, 2023.

“Fidelity has been an innovator in the active ETF space for years and the announcement reinforces our commitment to growing our lineup with innovative strategies that help meet the evolving needs of investors,” said Greg Friedman, Fidelity’s Head of ETF Management and Strategy. “A growing number of investors are seeking the tax efficiency, trading flexibility and potential cost efficiency benefits of ETF vehicles. These ETF conversions deliver new opportunities and value for our existing shareholders while also expanding our solutions to help meet demand for access to thematic strategies in an ETF wrapper.”

Fidelity is committed to active management, and all converted ETFs will utilize the same portfolio managers as the mutual funds. These strategies are powered by Fidelity’s fundamental research and leverage a systematic portfolio construction process. These funds are part of Fidelity’s thematic investment lineup, which includes areas such as (but not limited to): Disruption, Megatrends, andDifferentiated Insights.

Fidelity’s Growing ETF Platform

As a leading provider of ETFs, Fidelity’s platform offers individual investors and advisors access to more than 2,500 ETFs, commission-free, with more than $777 billion in ETF client assets. As part of its overall ETF offering, the 51 Fidelity managed ETFs include nine actively managed equity ETFs, nine actively managed fixed income ETFs, 15 factor ETFs, 11 passive equity sector ETFs, and Fidelity ONEQ.

As part of Fidelity’s commitment to financial education, the company offers educational resources to help investors review ETF investing ideas, decide which types of ETFs may fit their investing needs, or browse ETFs with Fidelity’s powerful screener: https://www.fidelity.com/etfs/investing-in-etfs.

Source: Fidelity

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